Cover: Evaluation of the Medicare-DoD Subvention Demonstration: Final Report

Evaluation of the Medicare-DoD Subvention Demonstration: Final Report

Published 2003

by Donna O. Farley, Katherine M. Harris, J. Scott Ashwood, Geralyn K. Cherry, George Dydek, John B. Carleton


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The Medicare-Department of Defense (DoD) Subvention Demonstration tested Senior Prime as a managed care approach for enhancing access to affordable health care for Medicare-eligible DoD beneficiaries. While Senior Prime achieved solid beneficiary participation and satisfaction, it also raised a difficult set of challenges involved in applying managed care to the DoD health care system. These challenges included financial issues such as establishing equitable capitation rates and an appropriate level-of-effort baseline, as well as management issues such as effective care management and administrative processes for health plan sites. The basic structures of TRICARE and the DoD health system, including separate management jurisdictions and hierarchical budgeting methods, contribute to the challenges by creating incentives that discourage delivery of cost-effective care. Military treatment facilities need to be motivated not only to provide excellent care but also to manage appropriateness of care and related costs. Although DoD has decided to discontinue the Senior Prime model, many of the lessons learned from this demonstration are applicable to any managed care program that DoD may contemplate in the future.

The research described in this report was prepared for Centers for Medicare & Medicaid Services (CMS) and the DoD Tricare Management Activity (TMA) by RAND Health.

This report is part of the RAND monograph report series. The monograph/report was a product of RAND from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

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